Prime Minister Ehud Olmert announced two weeks ago in the Knesset Foreign Affairs and Defense Committee that Israel would continue to negotiate with PA President Mahmoud Abbas for peace in the West Bank on the one hand; while on the other hand, it would fight Hamas in Gaza as if there were no peace negotiations.

Those who object to a peace treaty with the Palestinians raise the familiar arguments regarding Abbas's weakness and Hamas's refusal to recognize Israel's right to exist. They say - with a fair amount of justice - that signing a treaty with Abbas over the West Bank could result in Katyushas falling not just on Ashkelon and Sderot from Gaza, but also on Nahariya and Ben-Gurion Airport from the West Bank.

Supporters of a peace treaty claim, on the other hand and with a greater amount of justice, that absent political progress, there can anyway be no solution to the Kassams and Grads; that the IDF with all its might won't be able to crown Abbas in Gaza again.

IN ORDER to overcome this dilemma, we need to explore an out-of-the-box solution that would give Palestinians in Gaza and the West Bank a genuine incentive to join a future peace treaty - one that offers hope and dignity.

One such creative solution is for Israel and the PLO to formulate and jointly present a formal "peace contract" - with one categorical condition: The contract would transform itself into an actual peace treaty, with all that implies, when the West Bank and the Gaza Strip - on which the future Palestinian state is to arise - is under the rule of a single political authority, elected on the basis of the peace contract.

When the time is right, general elections would be held (also in Israel), and if the parties supporting the peace contract obtain a majority, the governments formed would be constituted as peace governments to implement the contract.

This process would ensure a smooth transition from peace contract to peace treaty. Each side would be fully aware of the facts and be able to take steps accordingly to create conditions in which the peace treaty could be signed - or they could choose to fight each other until the end of days.

A CONTRACT based, for example, upon the Clinton parameters or the Geneva Initiative would prove to the Palestinian people that a peace treaty and a state of their own is within reach, something that would plainly help weaken Hamas.

Such a peace contract would likely be backed by the Arab League, which would see it as Israel's positive response to the peace offer put forward by Saudi Arabia and which has had vast support from the entire Arab and most of the Muslim world.

The proposed peace contract would include a preamble with confidence-building measures, including prisoner exchanges (of individuals with or without blood on their hands), the release of Marwan Barghouti, and an arrangement for Gilad Schalit's return. Such measures would be acknowledged, in the context of a peace contract, as the starting point for breaking the cycle of violence, and not as another submission to Palestinian terrorism.

The basis of the peace contract would be the right of self-determination of both nations in Israel and Palestine. It would not be based on "human rights" or the "holy land," but on necessary historical compromises.

Finally, such a peace contract could initiate the beginning of the implementation of the "evacuation-compensation" bill, making it possible for settlers who wish to do so to buy houses inside Israel and start their reabsorption in an equitable manner and within a reasonable time, without waiting for a compelled evacuation of all settlements by the state.

The biggest advantage of this peace contract proposal is that it presents a responsibility test. By distinguishing between a peace contract and a peace treaty, both nations would have to give their approval in a democratic way and take the responsibility for the future in their own hands. This way, a new, positive consent can be reached, a consent that would allow us to pursue our lives in peace. We would at last be offered a way out of the tragic prospect of forever living by the sword.